On Tuesday 15 December, the Financial Conduct Authority (FCA) published their Final Notice on regulatory action that resulted in a £26m fine for Barclays.
The reasons for the fine were breaches in both Principle 3 and Principle 6 of the FCA’s Principles for Business and sections of the Consumer Credit sourcebook (CONC).
The Final Notice goes further into the reasons behind this and provides a warning shot for firms handling customers in financial difficulty because of the COVID-19 pandemic.
Behind the numbers
- At least 1.5m customers identified by Barclays who suffered, or were at risk of suffering detriment, because of Barclays’ actions
- Redress of over £273m paid out to the customers
- Original fine of £37.2m, reduced by 30% stage one discount for an early resolution to £26m
Behind the breaches
Barclays customers falling into arrears across several products experienced poor outcomes which were a result of five core failings, the majority of which lay in the Collections function:- Failing to follow its own customer contact policies
- Barclays’ agents failing to appropriately discuss and understand the reasons behind arrears and the customers' short- and long-term financial positions
- Failures to identify indicators of financial difficulty and / or customer vulnerability
- Failures in understanding of individual circumstances led to Barclays being unable to offer appropriate forbearance solutions for customers
- Systems and controls issues that resulted in administrative and other errors which caused additional issues for customers
The scale of the fine levied on Barclays was down to four drivers:
- Many customer accounts were potentially affected by the failings
- The circumstances of the customers impacted – in financial difficulty and/or vulnerable
- The persistent nature of the issue, covering the period from June 2013 to 2018
- Serious systemic problems which Barclays failed to promptly identify and address
Functional hotspots
- Collections
- QA & 1st Line Oversight/Customer Outcome Testing functions
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Topics: Insurance Sector, Retail Finance
